An Arkansas House panel has approved a proposal to use federal Medicaid funds to subsidize private health insurance for low-income residents.

The House Public Health Committee passed the Medicaid "private option" plan on a voice vote Tuesday. The proposal is an alternative to expanding Medicaid enrollment as called for under the federal health care law. Under the bill, Arkansas would use federal Medicaid funds to purchase private insurance for 250,000 residents who make up to 138 percent of the poverty line, which amounts to $15,415 per year.

Monday, House Public Health Committee Chairman John Burris told a special meeting of lawmakers that the private option gives the state a unique opportunity to reform the existing Medicaid program and shrink the number of people on the program.